What if my property manager does not have a license?

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What if my property manager does not have a license?

Investor · Los Angeles · Member since 2021 · 48 posts · 13 votes

Hi, my property manager does not have a license (but is in the process of getting it). What risks do I have as a landlord for both my long term and short term rentals?

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Leslie Anne Morris

Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes

Run

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Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
3y
Why would you add unnecessary risk to your business? If your property manager unknowingly violates fair housing laws, for example, you are easy prey for a prosecuting attorney because you knowingly hired an unlicensed person.
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
How long till he has it?
Why would he take on clients before he is legal to do so?
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Leslie Anne Morris
Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
3y
Run
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Pouya Banki
OP
Investor · Los Angeles · Member since 2021 · 48 posts · 13 votes
3y
Quote from @John Underwood:

How long till he has it?
Why would he take on clients before he is legal to do so?

1 month. I hadn't checked.
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Pouya Banki
OP
Investor · Los Angeles · Member since 2021 · 48 posts · 13 votes
3y
Quote from @Greg Scott:

Why would you add unnecessary risk to your business? If your property manager unknowingly violates fair housing laws, for example, you are easy prey for a prosecuting attorney because you knowingly hired an unlicensed person.

Thanks. Will be looking for a new property manager.
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Brooklyn McCarty
Investor · Member since 2022 · 1k+ posts · 754 votes
3y
Not something you want to get tangled up with!
1 Reply
January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
3y
Quote from @Pouya Banki:

Hi, my property manager does not have a license (but is in the process of getting it). What risks do I have as a landlord for both my long term and short term rentals?
What kind of license? There are different rules for managing properties if you are a REALTOR or a CAM (community association manager). To properly answer this question, I need more information on what type of license you're referring to, what type of company they work for, and what type(s) of activities they will be doing.
1 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
3y
Quote from @Pouya Banki:

Hi, my property manager does not have a license (but is in the process of getting it). What risks do I have as a landlord for both my long term and short term rentals?

Why are you using them? And why are they taking on clients illegally?
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Pouya Banki
OP
Investor · Los Angeles · Member since 2021 · 48 posts · 13 votes
3y
Quote from @January Johnson:

Quote from @Pouya Banki:

Hi, my property manager does not have a license (but is in the process of getting it). What risks do I have as a landlord for both my long term and short term rentals?
What kind of license? There are different rules for managing properties if you are a REALTOR or a CAM (community association manager). To properly answer this question, I need more information on what type of license you're referring to, what type of company they work for, and what type(s) of activities they will be doing.

I am using his services as an assistant, so I have not hired a "company." Wwould that be legal then? I wasn't aware there were "types" of licenses for property managers. I just want to make sure i am doing everything legally.
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Pouya Banki
OP
Investor · Los Angeles · Member since 2021 · 48 posts · 13 votes
3y
Quote from @Bob S.:

Quote from @Pouya Banki:

Hi, my property manager does not have a license (but is in the process of getting it). What risks do I have as a landlord for both my long term and short term rentals?

Why are you using them? And why are they taking on clients illegally?

He is an assistant that offered to also help with managing properties.
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January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
3y
Quote from @Pouya Banki:

Quote from @Bob S.:

Quote from @Pouya Banki:

Hi, my property manager does not have a license (but is in the process of getting it). What risks do I have as a landlord for both my long term and short term rentals?

Why are you using them? And why are they taking on clients illegally?

He is an assistant that offered to also help with managing properties.

I'm not sure of the rules in LA, but in my part of Florida, if the person in question is working for you directly, I don't know of any "license" they would need--only you as the property owner would need to be licensed with the state, and you need to pay your bed/occupancy/tourist taxes to the county. If you are hiring a property manager who works for another company (not yours), I would be sure they have the proper licenses as a company, but I still don't think they need an individual license of any kind.
BPers, please correct my thinking if you have knowledge otherwise.
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Pouya Banki
OP
Investor · Los Angeles · Member since 2021 · 48 posts · 13 votes
3y
Quote from @January Johnson:

Quote from @Pouya Banki:

Quote from @Bob S.:

Quote from @Pouya Banki:

Hi, my property manager does not have a license (but is in the process of getting it). What risks do I have as a landlord for both my long term and short term rentals?

Why are you using them? And why are they taking on clients illegally?

He is an assistant that offered to also help with managing properties.

I'm not sure of the rules in LA, but in my part of Florida, if the person in question is working for you directly, I don't know of any "license" they would need--only you as the property owner would need to be licensed with the state, and you need to pay your bed/occupancy/tourist taxes to the county. If you are hiring a property manager who works for another company (not yours), I would be sure they have the proper licenses as a company, but I still don't think they need an individual license of any kind.
BPers, please correct my thinking if you have knowledge otherwise.

Thank you for your feedback!

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Jeff CopelandBusiness Member
Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
3y
It depends on a lot of factors. California Code, Business and Professions Code (BPC) 10131 addresses this, and states that the following activities constitute the practice of real estate and thus require a real estate license:
A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:

(b) Leases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants, or negotiates the sale, purchase, or exchanges of leases on real property, or on a business opportunity, or collects rents from real property, or improvements thereon, or from business opportunities.
(there are more, I intentionally left out the rest, which are mostly related to sales)
However it also states:
(a) Subdivision (b) of Section 10131 does not apply to (1) the manager of a hotel, motel, auto and trailer park, to the resident manager of an apartment building, apartment complex, or court, or to the employees of that manager, or (2) any person or entity, including a person employed by a real estate broker, who, on behalf of another or others, solicits or arranges, or accepts reservations or money, or both, for transient occupancies described in paragraphs (1) and (2) of subdivision (b) of Section 1940 of the Civil Code , in a dwelling unit in a common interest development, as defined in Section 4100 of the Civil Code , in a dwelling unit in an apartment building or complex, or in a single-family home, or (3) any person other than the resident manager or employees of that manager, performing the following functions, who is the employee of the property management firm retained to manage a residential apartment building or complex or court and who is performing under the supervision and control of a broker of record who is an employee of that property management firm or a salesperson licensed to the broker who meets certain minimum requirements as specified in a regulation issued by the commissioner:

(A) Showing rental units and common areas to prospective tenants.

(B) Providing or accepting preprinted rental applications, or responding to inquiries from a prospective tenant concerning the completion of the application.

(C) Accepting deposits or fees for credit checks or administrative costs and accepting security deposits and rents.

(D) Providing information about rental rates and other terms and provisions of a lease or rental agreement, as set out in a schedule provided by an employer.

(E) Accepting signed leases and rental agreements from prospective tenants.

(b) A broker or salesperson shall exercise reasonable supervision and control over the activities of nonlicensed persons acting under paragraph (3) of subdivision (a).

(c) A broker employing nonlicensed persons to act under paragraph (3) of subdivision (a) shall comply with Section 10163 for each apartment building or complex or court where the nonlicensed persons are employed.

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Nathan Harden
Real Estate Agent · Puyallup, WA · Member since 2022 · 551 posts · 379 votes
3y
The risk is not worth the reward. Plenty more PM's out there.
0 Reply
Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
3y
I wouldn't be comfortable with it personally, we interviewed one that didn't and I backed out
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
3y
@Pouya Banki so, I'm going to start providing medical services without being a licensed physician - will you be my first patient and let me operate on you?
Pretty please?
I'll give you a great deal!
[email protected]248-209-6824
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January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
3y
Quote from @Drew Sygit:

@Pouya Banki so, I'm going to start providing medical services without being a licensed physician - will you be my first patient and let me operate on you?
Pretty please?
I'll give you a great deal!

No need to be sarky with false equivalencies. OP is just trying to learn, like all of us.
2 Reply
Pouya Banki
OP
Investor · Los Angeles · Member since 2021 · 48 posts · 13 votes
3y
Quote from @Jeff Copeland:

It depends on a lot of factors. California Code, Business and Professions Code (BPC) 10131 addresses this, and states that the following activities constitute the practice of real estate and thus require a real estate license:
A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:

(b) Leases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants, or negotiates the sale, purchase, or exchanges of leases on real property, or on a business opportunity, or collects rents from real property, or improvements thereon, or from business opportunities.
(there are more, I intentionally left out the rest, which are mostly related to sales)
However it also states:
(a) Subdivision (b) of Section 10131 does not apply to (1) the manager of a hotel, motel, auto and trailer park, to the resident manager of an apartment building, apartment complex, or court, or to the employees of that manager, or (2) any person or entity, including a person employed by a real estate broker, who, on behalf of another or others, solicits or arranges, or accepts reservations or money, or both, for transient occupancies described in paragraphs (1) and (2) of subdivision (b) of Section 1940 of the Civil Code , in a dwelling unit in a common interest development, as defined in Section 4100 of the Civil Code , in a dwelling unit in an apartment building or complex, or in a single-family home, or (3) any person other than the resident manager or employees of that manager, performing the following functions, who is the employee of the property management firm retained to manage a residential apartment building or complex or court and who is performing under the supervision and control of a broker of record who is an employee of that property management firm or a salesperson licensed to the broker who meets certain minimum requirements as specified in a regulation issued by the commissioner:

(A) Showing rental units and common areas to prospective tenants.

(B) Providing or accepting preprinted rental applications, or responding to inquiries from a prospective tenant concerning the completion of the application.

(C) Accepting deposits or fees for credit checks or administrative costs and accepting security deposits and rents.

(D) Providing information about rental rates and other terms and provisions of a lease or rental agreement, as set out in a schedule provided by an employer.

(E) Accepting signed leases and rental agreements from prospective tenants.

(b) A broker or salesperson shall exercise reasonable supervision and control over the activities of nonlicensed persons acting under paragraph (3) of subdivision (a).

(c) A broker employing nonlicensed persons to act under paragraph (3) of subdivision (a) shall comply with Section 10163 for each apartment building or complex or court where the nonlicensed persons are employed.

Thank you @Jeff Copeland🙏🏻
1 Reply
Bud Gaffney
Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
3y
@Pouya Banki property managers don’t need to have a license…
1 Reply
Bud Gaffney
Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
3y
@Pouya Banki in Massachusetts anyways.
1 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
3y
@January Johnson
If this person had posted this question BEFORE they hired the PMC - understandable.

There is no excuse for NOT doing proper research before making a business decision!
If this poor decision leads to a court hearing, the judge will NOT give this person any benefit of the doubt for their ignorance - the courts do not recognize ignorance as an excuse for business owners.
While your empathy is understandable, some people need "tough love" to face reality.
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Pouya Banki
OP
Investor · Los Angeles · Member since 2021 · 48 posts · 13 votes
3y
Thank you!
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Hersh ShahBusiness Member
Realtor · Atlanta, GA · Member since 2016 · 121 posts · 80 votes
3y
Quote from @Pouya Banki:

Hi, my property manager does not have a license (but is in the process of getting it). What risks do I have as a landlord for both my long term and short term rentals?
Would you hire an attorney to represent you before they passed the BAR? Or a Doctor to perform surgery on you before graduating from Medical School? In both scenarios, getting your credentials doesn't make you qualified to handle the job unless you have previous on the job experience.
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Napoleon DeCiutiis
Real Estate Agent · The Short Term Shop / Florida Emerald and Forgotten Coasts · Member since 2022 · 217 posts · 126 votes
3y
Quote from @Drew Sygit:

@January Johnson
If this person had posted this question BEFORE they hired the PMC - understandable.

There is no excuse for NOT doing proper research before making a business decision!
If this poor decision leads to a court hearing, the judge will NOT give this person any benefit of the doubt for their ignorance - the courts do not recognize ignorance as an excuse for business owners.
While your empathy is understandable, some people need "tough love" to face reality.

@Drew Sygit, We don't know enough to do anything other than request some more information. Everyone is jumping to conclusions.

From California Code:

First, A property manager does not need a real estate license if they do not engage in either leasing activities or the collection or rents. (Bus. & Prof. C. § 10131.)

Second, the Code does not apply licensing requirements to “the resident manager of an apartment building, apartment complex… or to the employees of that manager…” (Bus. & Prof. C. § 10131.01(a).) This means that a property manager who lives on-site at an apartment building does not need a license to engage in leasing or collecting rents. Further, employees of that on-site manager do not require a license either. (Bus. & Prof. C. § 10131.01(a).)

Third, the Code does not require a license for off-site persons performing certain activities in connection with residential apartments if that person is an employee of a licensed property manager. (Bus. & Prof. C. § 10131.01(a).) The activities include showing rental units to prospective tenants; dealing with rental applications; accepting deposits, fees, and rents; providing information about rental rates and other terms set forth by the licensed employer; and accepting signed leases from prospective tenants. (Bus. & Prof. C. § 10131.01(a).) While this third exception encompasses most property management duties, it requires a licensed broker or salesperson to supervise and control the persons performing these activities. (Bus. & Prof. C. § 10131.01(b).)

So- What duties does @Pouya Banki have his PM perform? Does Pouya have his license? What type of properties does he run?

The advice I would give him would be to consult a RE Attorney in his State.

Your thoughts?
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
3y
@Pouya Banki why did you not properly vett them before hiring them?
Recommend you terminate and hire a company that is properly licensed.
Check www.NARPM.com
[email protected]248-209-6824
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